Upon graduation from University of Mississippi, he joined the U.S. Navy. He was commissioned an ensign.

In early 1982 he was stationed at the classified Naval Sound Surveillance System (SOSUS) station at Coos Head, which had an allowance of twelve officers, ninety-five enlisted and 15 civilians. He was later given a bad fitness report by his executive officer, Lt. Cmdr. Marney Finch who transferred him to Washington D.C. later that year.[14]

In 1984, Madsen reports that he was loaned to the National Security Agency by the Navy.[15] He resigned from the Navy in 1985 as a lieutenant, having been passed over for promotion. Madsen described himself as the "most senior lieutenant in the Navy".[16]

On June 30, 2013, the London Observer published a front page story sourced to Madsen. According to Michael Moynihan of the Daily Beast, shortly after going to press, The Observer "realized that the story's author, Jamie Doward, failed to conduct even the most perfunctory Google search on Madsen. That would have revealed him to be a paranoid conspiracy theorist in the tradition of Alex Jones, on whose radio show he often appears".[9] The article was quickly removed from the parent (Guardian) newspaper's website pending an investigation, but not before the print edition had gone to press.[6][30][31][31] According to Forbes magazine, The Observer likely took the story down as it was concerned with the reliability of the source rather than the content as no matter how "left field" the source was, the story seems to be largely true and has been a matter of public record for some years.[32]

The story was allegedly sourced from a blog in which Madsen had been interviewed regarding his views on claims by NSA leaker Edward Snowden, alleging connections between the National Security Agency and several European governments known as ECHELON.[30][33] In the story, entitled, “Revealed: Secret European Deal to Hand Over Private Data to Americans,” Madsen claimed that several European governments were “colluding with the U.S. over the mass harvesting of personal communications data.”[31]

Joshua Gillin of the Poynter Institute claimed that The Observer had not interviewed Madsen but had taken the quotes from an online interview with Madsen and that Madsen's "declassified documents", upon which the story was based, were publicly available on the NSA website. However, Gillin later spoke to Madsen who stated that he was interviewed for The Observer article.[4] According to Forbes, on June 30, 2013, the same day that The Observer both published and retracted the article, Reuters reported the same claims, but sourced from NSA documentation supplied by Edward Snowden to support his claims regarding the cyber-espionage programs Tempora and Prism.[32][34]

On July 5, 2013 The Guardian responded to the controversy saying that "The documentary evidence for the story, which was based on a number of sources, was sound, but it was wrong to connect Wayne Madsen with the story. For this reason, the original story was removed from the website, and the Observer splash was replaced."[35]

In 2003 he claimed that he had uncovered information in a classified congressional report that he said contained information linking the September 11 attacks to the government of Saudi Arabia and the Bush administration through financial transactions with the hijackers. The Saudi Foreign Minister demanded the report be declassified so it could respond, however, the Bush administration refused, claiming that to do so would compromise intelligence sources and methods.[36]

In a 2010 interview for Veterans Today, when asked what he thought about claims by former Italian President Francesco Cossiga, Hamid Gul, the former head of Pakistan’s Intelligence Service and several investigative journalists that Israel was behind 9/11, Madsen stated that he believed the 9/11 attacks were "an operation carried out by Mossad, Saudi intelligence,...and elements of the CIA."[37] In 2014, Madsen self-published a book that said that both Israel and Saudi Arabia were intimately involved in planning and carrying out the 9/11 attack on the United States as a "false-flag" attack.

Madsen has claimed that Obama is gay. The Nation writing on that conspiracy theory reported that Wayne Madsen "is the source on Obama’s visits to the bath house and who revealed how Obama used basketball pickup games to pick up men. Obama, Madsen says, had homosexual trysts with Representative Artur Davis, Massachusetts Governor Deval Patrick and Senate majority leader Bill Frist!"[38][39]

On June 9, 2008 he reported that unnamed "GOP dirty tricks operatives" had found a Kenyan birth certificate registering the birth of Barack Obama, Jr. on August 4, 1961. "However, the registration is a common practice in African countries whose citizens abroad have families with foreign nationals."[40] This birth certificate was a cornerstone of the "Kenyan Born" subset of the birther conspiracy theories, and Madsen's article was cited in a Washington state petition challenging Obama's eligibility to be president.[41]

In 2012, Madsen self-published a book Manufacturing a President that said that Barack Obama was a creation of the CIA.

Madsen has asserted in The Palestine Telegraph that hundreds of Iraqi scientists who had been assassinated or died in accidents after the invasion in 2003 were actually murdered by Mossad hit teams operating in Iraq.[42]

In a 2008 ArabNews article suggesting that the criminal prosecution of New York State governor Eliot Spitzer was partly due to the Israeli intelligence agency Mossad, Wayne Madsen says that the prostitution firm that entangled Spitzer in a call girl ring, is seen as a front for Israel’s intelligence agency, the Mossad. Further Madsen suggested that Spitzer was outed by Russian-Israeli gangsters angry at Spitzer's crack down on Wall Street malfeasance.[45]

He has asserted that members of AIPAC and Israel's Mossad dominate CNN's management and urges his readers to boycott CNN and its advertisers until they are fired. He has begun a project to oppose Israel as a threat to world peace.[46] Madsen has stated in an interview that "the Israeli lobby owns the Congress, media, Hollywood, Wall Street, both political parties and the White House".[37][47]

In 2010, Madsen reported in the Pakistan Daily that unnamed sources suggested that the company formerly known as Blackwater, had been conducting false-flag operations in Pakistan that were blamed on the Tehrik-i-Taliban Pakistan.[48]

In 2002 he suggested to The Guardian newspaper that the United States Navy had aided in an attempted overthrow of Venezuelan president, Hugo Chavez. Madsen stated that US military attaches had been in contact with members of the Venezuelan military to discuss the possibility of a coup. Further, Madsen said that while the [U.S.] navy was in the area for training operations unconnected to the coup, they had aided with signals intelligence as the coup progressed and engaged in communications jamming support for the Venezuelan military. Madsen asserted that the US Navy jammed communications to and from the diplomatic missions of Libya, Cuba, Iran and Iraq. According to the Guardian, "The US embassy dismissed the allegations as 'ridiculous'."[49] An OIG report requested by Sen. Christopher Dodd, found no wrongdoing by any U.S. officials either in the State Department or at the U.S. Embassy in Caracas.[50]

On April 25, 2009, Madsen said that unidentified journalists from Mexico and Indonesia had spoken to some unidentified UN World Health Organization officials and scientists believed the 2009 new H1N1 strain of swine flu virus appeared to be the product of U.S. military sponsored gene splicing, as opposed to natural processes.[52][53] While it can not be ruled out that the virus was created in a research laboratory or vaccine factory, the most plausible explanation is that the virus is the result of modern farming techniques. New Scientist magazine cited the example of a H1N2 influenza pandemic in the 1990s that was a reassortment (mix) of swine, human and avian strains.[54]

^At his first posting in Newport, Ensign Madsen was introduced to the "oldest lieutenant in the Navy". This lieutenant had presented himself for an interview with the controversial Admiral Hyman G. Rickover who told him "You have 15 seconds to piss me off" to which he replied by picking up a model submarine from the admiral's desk and smashing it. This lieutenant didn't get the position he was applying for, never attained further promotion and ended his career as the most senior lieutenant in the U.S. Navy. Madsen says that, when he himself resigned in 1985, he had the same status as the lieutenant he had met in Newport.